Bangalore-based microfinance institution (MFI) Janalakshmi Financial Services, which primarily focuses on lending to urban poor, has applied for a banking licence. The MFI had recently raised a R325 crore in private equity funding. In an interview with Ajay Sukumaran, Janalakshmi Financial chief Ramesh Ramanthan says the MFI aims at becoming a ?unique inclusion-oriented bank?, in case it secures a licence. Excerpts:
Janalakshmi crossed 1-million customer milestone this week on its group loan portfolio and it now aims at rapidly scaling up the business. What kind of growth rate are you looking at?
We have our plans laid out for the next few years. Our balance sheet outstanding is about R1,500 crore right now. We have little less than 6 months in the current financial year and we intend to do R2,500 crore of disbursals this year, which, if you compare with last year, will be a little over 100% growth. We were around R1,200 crore last year. Commensurate with that will be the customer base as well. We will end the year with about 1.8 million customers on the group loan itself. That pace will continue for the next couple of years at least.
Will this growth come from new cities or existing branches?
A combination of both. We have presence in 62 cities spread across 12 states. In some cities like Bangalore, we have a fairly deep penetration because we started in Bangalore. But in many cities we don’t have a very deep footprint. So in those cities, for example Nagpur, we can expand because coverage is not complete yet. But there will also be branches in new cities. We have just crossed 100 branches last month. We will add another 60 branches by March and next year we will add another 100 branches.
Is Janalakshmi Financial focussing only on urban micro-lending?
Primarily urban. We have just opened four rural branches and there again we want to do it in a slightly different way. We believe there is an urban-rural link in certain areas. For example, food and vegetable supplies where there is a strong link between a rural production and urban market. We want to understand that and open up rural branches which are directly linked to an urban economy around a city or a town.
Now that you have applied for banking licence, what will be the vision if the licence comes through?
The vision is to be a full service provider for all the financial needs of the people we are servicing. If you are a bank you have the ability to do that in a much freer way. You can do savings products and payments products, which you can’t do today without a banking licence. If you don’t have a licence you have to do it in partnership. But that is not very effective because you cannot innovate as much, as you are building on somebody else’s infrastructure. They have to also share the vision which is not necessarily always the case. So it constrains you.
Will the current focus alter because as a bank you might need to build scale by other services?
No, it will not. We want to be an inclusion-driven bank. In fact, our whole belief is that you can build a bank in India on basic premise of inclusion because there is a scale need, there is a huge demand. We will certainly not do corporate banking and whatever other banks are doing. Our entire business model is based around inclusion and things that are connected to it. If we get the privilege of getting a banking licence, we will be a really unique inclusion-oriented bank in India.